LAS VEGAS — In a local and national housing market already rife with challenges — particularly soaring costs amid low, low supply — another issue is primed to further drag down people’s ability to buy homes: rising interest rates.
The Federal Reserve’s interest rate hike announced Wednesday played out in real time at the National Association of Real Estate Editor’s conference in Las Vegas. Speaker Joseph Nahas, chairman of international real estate advisory group, the Counselors of Real Estate, announced in the morning that the Fed was likely to hike benchmark rates to 2 percent, up from 1.75 percent. A few hours later, Taylor Marr, a senior economist with Seattle-based real estate brokerage Redfin, took the stage to say the new rate had been confirmed. That federal benchmark increase sets the stage for higher mortgage rates across the country.
What does that mean for homebuyers? Nahas’ group, in its annual list of issues facing the national real estate market, ranked interest rates and the economy as the No. 1 short-term challenge. Higher rates stand to make the nation’s affordability crisis even worse by making mortgages less affordable, the Counselors argue.
“It may be painful in the short run. We may have a slower number of new home purchases or resales due to higher mortgages rates but inflation wont get out of control and the economy will continue to grow at a moderate pace as opposed to and overheated pace,” Nahas said of the Fed’s thinking.
Redfin surveyed 4,000 prospective homebuyers across the country late last year about what they might do if average mortgage rates went over 5 percent after years of hovering around 3 percent. One in five responded they would speed up their timeline to buy.
“There is this pressure to hurry up and buy before rates rise before they can …read more
Source:: The Denver Post – Business